FDI in Indian Solar: Rules for Foreign Buyers (2026)
Last updated 18 October 2026 · By Pradeep Kumar, India Solar
The route
Power generation other than atomic energy is open to 100% foreign direct investment under the automatic route of India's FDI policy. That covers buying an operating plant company as well as building a new one.
Press Note 3 (2020) requires government approval when the investor, or a beneficial owner of the investor, is in or a citizen of a country sharing a land border with India (for example China). A 2026 amendment reportedly lets a non-controlling beneficial owner from such a country hold up to 10% through the automatic route. Funds and holding companies should check their investors against this.
How the money goes in
| Instrument | Counts as | Notes |
|---|---|---|
| Equity shares | FDI | Standard route for buying an existing company. |
| Compulsorily convertible preference shares or debentures (CCPS, CCDs) | FDI | CCD interest can be a tax-deductible way to take cash out before profits allow dividends. |
| Loans from abroad | External commercial borrowing (ECB) | RBI eased the ECB framework from February 2026 (as reported): broader lenders, no all-in-cost ceiling, 3-year minimum average maturity. Related-party loans must be at arm's length. |
Pricing and filings
- Shares issued or transferred to a non-resident must be priced at or above fair value, using an internationally accepted method such as discounted cash flow, certified by a chartered accountant or SEBI-registered merchant banker.
- New shares issued to you: form FC-GPR within 30 days of allotment, on the RBI's FIRMS portal.
- Shares bought from Indian residents: form FC-TRS within 60 days of the transfer.
- Every year while the investment is held: the Foreign Liabilities and Assets (FLA) return, due 15 July.
- A foreign-owned company that invests in another Indian company follows the downstream-investment rules.
Land
Foreign investment in agricultural land is not permitted, so solar plant companies normally lease the land. Check that the lease is registered, runs longer than the PPA and has consent from every co-owner.
Getting money out
Dividends, interest on shareholder loans or convertible debentures, buybacks and sale proceeds can be repatriated through an authorised bank after Indian tax, with Forms 15CA and 15CB. Treaty rates for your country apply with a tax residency certificate and Form 10F. See the dividend tax guide for rates.
Sources
General information only, not investment, legal or tax advice. Rules change and depend on your circumstances; take advice before you act. India Solar does not offer securities or guarantee returns.